Jasco's acquisition of ARC Telecoms will bolster customer base

4 Apr 2012

Jasco Electronics Holdings has completed the acquisition of ARC Telecoms, a converged voice and IP data telecommunications service provider specialising in the small and medium enterprise sector of South Africa, for an undisclosed amount.

This acquisition will bolster Jasco's customer base and annuity business, enabling the company to take its end-to-end offering to a broader local market. The entire ARC Telecoms entity will be incorporated into Jasco ICT Solutions.

ARC Telecoms was originally formed in April 2010 as a full Internet service provider (ISP) and telecoms provider to the South African mid-market. It was funded by majority shareholders World of Avatar venture capitalists, the brainchild of Alan Knott-Craig Jr, with additional shares owned by the management team.

Local economy will benefit

Says Pete da Silva, CEO of Jasco: "This purchase follows our strategic intent of growth through bolt-on acquisitions. ARC Telecoms provides an offering that is complementary to the solutions and services already offered by Jasco. We will now have access to ARC Telecoms' customer base, which affords us the opportunity to take the entire Jasco portfolio spanning ICT Solutions, Industry Solutions and Energy Solutions to this base. We appreciate that World of Avatar took on board the risk and incubated this start-up business from an entrepreneurial idea into an organisation that is of great interest to corporate South Africa. This type of growth is highly beneficial to the local economy."

Says Alan Knott-Craig Jr: "In the past two years we have helped to grow ARC Telecoms from a business plan into a fully-fledged mid-market converged telecoms and ISP business. Given the highly competitive industry the company operates in, it was the sensible option for shareholders to seek a large player in the telecoms market to partner with. To this end, the shareholders identified Jasco as an excellent potential fit, and talks culminated in Jasco acquiring 100% of the business."

Business model is of strategic importance

Mark van Vuuren, MD of Jasco ICT Solutions says there are great synergies between the existing Jasco ICT Solutions business and the offering delivered by ARC Telecoms. "We are excited to welcome ARC's sales and management team into Jasco ICT Solutions and look forward to taking the integrated, end-to-end Jasco offering to ARC's mid-market customer base." ARC Telecoms boasts a business model that is entirely annuity revenue driven, an area which Jasco has identified as one of strategic importance.

By becoming part of The Jasco Group, ARC Telecoms will benefit from the critical mass that a large JSE-listed company delivers, providing ARC Telecoms' customers with a sense of assurance. It will also enable them to leverage the high levels of skill the Group can offer as an established player in the telecoms market.

Greater stability for customers

"This acquisition is the next logical next step for our company, taking us to the next level and is a good fit for our business in terms of strategy, operations and infrastructure. It offers us and our customers greater stability and scale, which in turn enables us to be more innovative and progressive," says Steve Briggs, CEO of ARC Telecoms.

Briggs will be stepping down as CEO, but will be taking up a strategic role within Jasco ICT Solutions in order to ensure continuity and assist to embed the acquisition. Paven Chetty will retain his position as MD of ARC Telecoms.